gas properties on behalf of others who participate in drilling with Ladd or who own properties jointly with Ladd. Ladd owns producing oil and gas properties situated primarily in the Mid-Continent, Gulf Coast and Rocky Mountain areas of the United States and in the provinces of Alberta and Saskatchewan, Canada. On July 31, 1976 Ladd had an interest in 3,794 gross producing oil wells representing 1,065.3 net producing oil wells and 551 gross producing gas wells representing 246.3 net producing gas wells.* On the same date Ladd owned producing leasehold interests in 534,091 gross acres representing 197,488 net acres and producing mineral interests in 159,393 gross acres representing 24,594 net acres.** The following table summarizes Ladd's net interest in oil and gas production for the fiscal years 1971 through 1975 and the nine months ended July 31, 1976: Nine Months Ended July 31, 1971 1972 1973 1974 1975 1976 Crude oil (barrels)(a): United States Before production payments.................. 1,790,186 2,058,260 1,962,793 1,887,107 2,214,400 1,581,952 Applied to production payments............ 4,162 3,414 2,265 1,633 _787 _ After production payments..................... 1,786,024 2,054,846 1,960,528 1,885,474 2,213,613 1,581,952 Canada............................................................ 71,937 80,943 154,060 253,919 220,731 137,290 1,857,961 2,135,789 2,114,588 2,139,393 2,434,344 1,719,242 Natural gas (thousands of cubic feet): United States Before production payments.................. 24,086,774 24,487,959 28,097,534 27,136,442 25,596,487 18,766,801 Applied to production payments............ 809,648 615,934 496,028 351,257 _114,150 - After production payments..................... 23,277,126 23,872,025 27,601,506 26,785,185 25,482,337 18,766,801 Canada............................................................ 528,832 1,384,843 1,519,641 1,222,679 1,285,034 744,393 23,805,958 25,256,868 29,121,147 28,007,864 26,767,371 19,511,194 (a) Except as indicated in the sentence immediately following this table, includes production of condensate and natural gas liquids representing less than 3% of total production. In addition to production shown above, in November 1974 Ladd commenced operation of a natural gas liquids extraction plant. During fiscal 1975 natural gas liquids recovered amounted to 112,232 barrels, and during the 9-month period ended July 31, 1976 recovery amounted to 105,777 barrels. As of December 31, 1975, Ladd estimated that it could produce 2,260,000 barrels of oil and 27,135,000 thousands of cubic feet of natural gas during the ensuing one-year period from its then current proved developed reserves using presently installed equipment under existing economic and operating conditions. As of September 21, 1976, Ladd was participating in the drilling of 21 gross oil and gas wells (7.71 net wells). Out of this total 6 were exploratory wells and 15 were development wells (2 of which were being completed for production). Other current operations include the expansion and development of waterflood projects in Oklahoma which will involve the drilling of 35 oil wells, 35 water input wells and 1 water supply well. *The term "gross wells" means the total number of wells in which Ladd had an interest. The term "net wells" means the sum of Ladd's fractional interests therein. Of the total producing wells, 9 gross gas wells (5.8 net wells) represented multiple completions. ** The term "gross acres" means the total number of acres in which Ladd had an interest. The term "net leasehold acres" means the sum of Ladd's fractional interests in each leasehold property. The term "net mineral acres" means the sum of Ladd's fractional interests in each mineral interest property. Mineral interests constitute perpetual ownership rights in oil and gas. 60 The following table summarizes Ladd's estimated net proved reserves of crude oil, condensate, natural gas liquids and natural gas as of December 31, 1975: Crude Oil, Condensate and Natural Natural Gas Gas Liquids (thousands of (barrels) cubic feet) United States............................................................ 11,345,400 224,527,200 Canada...................................................................... 2,704,400 33,833,500 Total.......................................................... 14,049,800 258,360,700 The estimates above include only those reserves considered to be fully proved by development work done through the end of 1975, and do not include potential reserves which may be recovered through future extensions of existing fields or through application of assisted recovery techniques now known but not in use at this time. On April 1, 1976 Ladd filed with the Federal Power Commission an estimate of its proved reserves in the United States of 269,350,000 thousands of cubic feet of natural gas as of December 31, 1975. Consistent with Federal Power Commission regulations, this figure includes proved reserves in the amount of 44,822,800 thousands of cubic feet attributable to royalty interests payable to third parties out of the properties owned by Ladd. Within the past twelve months Ladd has not filed, nor has it been required to file, any estimates of total oil or gas reserves with any other federal or foreign governmental authority or agency. Ladd's undeveloped oil and gas properties consisted of the following as of July 31, 1976: Leasehold Interests (acres) Mineral Interests (acres) Gross Net Gross Net United States.......................................... 418,140 215,068 1,685,602 480,348 Canada................................................... 1,483,117 195,514 38,673 5,113 Total........................................ 1,901,257 410,582 1,724,275 485,461 Production and sale of oil and gas is subject to federal and state governmental regulation in a variety of ways. Many states and Canadian provinces impose regulations concerning the prevention of waste, the conservation of oil and natural gas, pollution controls and various other matters. Many jurisdictions have imposed limitations on the production of oil and gas by restricting the rate of flow for oil and gas wells below their actual capacity to produce, although the current shortage of domestic crude oil has led to relaxation of these controls. The governments of the United States and Canada have power to permit increases in the amount of oil imported from other countries and to impose pollution control measures. Canada has imposed a substantial tax on the export of crude oil, the effect of which has been to reduce or eliminate the benefits derived from crude oil price increases. The Federal Power Commission regulates the transportation and marketing, including price, of natural gas transported or sold in interstate commerce. The price of natural gas sold in intrastate commerce may be regulated by a state agency having jurisdiction. The Energy Policy and Conservation Act requires the President to maintain price and allocation controls on most crude oil until June 1, 1979 and grants discretionary authority over such matters until October 1, 1981. Under the Act the President has established ceiling prices for the sale of most domestic crude oil which will result in a weighted average price for all domestic crude oil of $7.66 per barrel. The Act permits the President to increase this weighted average price by up to 10% per year without Congressional review and by a greater percentage subject to Congressional review. The immediate effect of the price ceilings has been to lower the weighted average price per barrel of domestic crude oil sold by Ladd to about $10.26 per barrel in July 1976 from $11.02 per barrel in January 1976. Land Acquisition and Development Utah and certain of its affiliates engage in the acquisition and development of industrial, commercial and residential properties for resale or investment. The principal land development projects, all in California except as noted, are a 47-acre shopping center in Alameda, 916 acres of residential, industrial 61